Tanzanian Shilling Crisis: Will The Country Go In The Hyper Inflation Direction Of Zimbabwe?

Kenyan Investors Expanding In The Region Should Be Wary

It is worrying that the government of President Jakaya Kikwete does not seem to be addressing a crisis that interestingly seems to have started at the beginning of this year and can be directly linked to policies of the new government. If anything everything they are doing now seems to be designed to worsen the situation.

At the beginning of this year as the new administration settled into office, the Tanzanian shilling was exchanging at about Tshs 1,184 to the dollar. As I write this post it is exchanging at Tshs 1,348 (a drop of almost 13%) and still falling.

There are a number of factors that Tanzanian officials point to as culprits and it is true that some of them are beyond their control. However it is clear that policies of the new government are designed to “bite the hand that feeds the nation.”

The media had been rife with the sort of reports that would alarm any sane foreign investor in the country. Then to make matters even more complex, it is becoming increasingly difficult to secure work permits for key staff in a country where the labor force is far from ready to handle the challenges of the 21st century business environment.

In the wake of these uncertainties, it seems that what many investors in the country are postponing any expansion projects and generally trying to keep as much of their money as possible in foreign currency. Naturally this is weakening the Tanzanian shilling even more.

Read about the latest controversy between the Tanzanian government and foreign investors in mining.

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